-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KN0rLHpxiVkrzEoZ20fNipOcDoNy7OupFHOnFyuqR98UGZdLM1M9dt1T0QKTt2+f Pm+yM28jpCp4tKwhfgYMlA== 0000797331-97-000003.txt : 19971020 0000797331-97-000003.hdr.sgml : 19971020 ACCESSION NUMBER: 0000797331-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19971017 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SECURED INVESTMENT RESOURCES FUND LP II CENTRAL INDEX KEY: 0000797331 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363451000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-16798 FILM NUMBER: 97697564 BUSINESS ADDRESS: STREET 1: 5453 W 61ST PL CITY: MISSION STATE: KS ZIP: 66205 BUSINESS PHONE: 9133845700 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to Commission file number 0-16798 SECURED INVESTMENT RESOURCES FUND, L.P. II (Exact name of registrant as specified in its charter) Delaware 36-3451000 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5453 W. 61st Place, Mission, Kansas 66205 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (913) 384-5700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests ("Units") Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No SECURED INVESTMENT RESOURCES FUND, L.P. II INDEX PART I. FINANCIAL INFORMATION Page Item 1. Financial Statements (Unaudited): Balance Sheets -- June 30, 1997 and December 31, 1996 3-4 Statements of Operations -- Three and Six Months Ended June 30, 1997 and 1996 5 Statements of Partnership Capital -- Six Months Ended June 30, 1997 and the Years Ended December 31, 1996, and 1995 6 Statements of Cash Flows -- Six Months Ended June 30, 1997 and 1996 7-8 Notes to Financial Statements 9-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 12 SIGNATURES 13 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS June 30, 1997 December 31, (Unaudited) 1996 ASSETS INVESTMENT PROPERTIES Land and buildings $ 36,358,777 $ 36,354,615 Furniture, fixtures and equipment 2,025,987 1,983,816 38,384,764 38,338,431 Less accumulated depreciation and allowance for losses 12,560,770 11,946,482 25,823,994 26,391,949 RESTRICTED DEPOSITS Bond cash reserves 1,510,000 1,510,000 Bond principal reduction reserves 489,341 455,125 Restricted Deposits 28,750 28,750 2,028,091 1,993,875 OTHER ASSETS Cash 855,016 561,667 Rents and other receivables, less allowance of $86,125 in 1997 and $54,600 in 1996 30,272 14,431 Due from related parties (Note C) 179,423 179,423 Prepaid expenses 114,529 96,982 Debt issuance costs, net of accumulated amortization of $276,491 in 1997 and $218,729 in 1996 324,323 365,585 Commercial commissions, deposits and other 76,594 98,307 1,580,157 1,316,395 TOTAL ASSETS $ 29,432,242 $ 29,702,219 SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS--CONT'D. June 30, 1997 December 31, (Unaudited) 1996 LIABILITIES AND PARTNERSHIP CAPITAL Mortgage debt (Note B) $ 27,458,624 $ 27,473,556 Deferred interest (Note B) 737,370 737,370 Accrued interest 776,161 684,139 Accounts payable and accrued expenses 585,397 471,568 Unearned revenue 7,004 36,302 Tenant security deposits 145,855 148,462 TOTAL LIABILITIES 29,710,411 29,551,397 PARTNERSHIP CAPITAL General Partner Capital contribution 1,000 1,000 Partnership deficit (191,811) (187,521) (190,811) (186,521) Limited Partner Capital contributions 18,901,831 18,901,831 Partnership deficit (18,989,189) (18,564,488) (87,358) 337,343 TOTAL PARTNERSHIP CAPITAL (278,169) 150,822 $ 29,432,242 $ 29,702,219 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF OPERATIONS (Unaudited) Six Months Ended Three Months Ended June 30, June 30, 1997 1996 1997 1996 REVENUES Rents $2,958,583 $3,022,151 $1,484,493 $1,519,123 Maintenance escalations and other 59,482 53,490 29,972 25,338 3,018,065 3,075,641 1,514,465 1,544,461 OPERATING AND ADMINISTRATIVE EXPENSES Property operating expenses 1,295,485 1,255,014 669,034 645,458 General and administrative expenses 75,977 72,123 39,899 35,991 Professional services 51,602 45,883 26,009 32,787 Management fees 130,088 141,900 65,575 71,096 1,553,152 1,514,920 800,517 785,332 NET OPERATING INCOME 1,464,913 1,560,721 713,948 759,129 NON-OPERATING EXPENSES Interest 1,221,854 1,200,718 615,597 589,899 Depreciation and amortization 672,050 621,671 336,025 310,800 1,893,904 1,822,389 951,622 900,699 Partnership Loss before extra ordinary item $ (428,991) (261,668) (237,674) (141,570) Extraordinary Gain on debt restructuring-- (Note B) --- 352,227 --- 352,227 PARTNERSHIP INCOME (LOSS) $ (428,991) $ 90,559 $ (237,674) $ 210,657 Allocation of income (loss): General Partner (4,290) 906 (2,377) 2,107 Limited Partner (424,701) 89,653 (235,297) 208,550 $ (428,991) $ 90,559 $ (237,674) $ 210,657 Partnership income (loss) per limited partnership unit $ (7.91) $ 1.67 $ (4.38) $ 3.89 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited) Six Months Ended June 30, 1997 (Unaudited) and the Years Ended December 31, 1996 and 1995 General Limited Partner Partner Total Balances at January 1, 1995 $ (184,073) $ 579,650 $ 395,577 Partnership loss (513) (50,782) (51,295) Balances at December 31, 1995 (184,586) 528,868 344,282 Partnership loss (1,935) (191,525) (193,460) Balances at December 31, 1996 (186,521) 337,343 150,822 Partnership loss (4,290) (424,701) (428,991) Balances at June 30, 1997 $ (190,811) $ (87,358) $ (278,169) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II, STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 1997 1996 OPERATING ACTIVITIES Partnership income $ (428,991) $ 90,559 Adjustments to reconcile partnership loss to net cash provided by operating activities: Depreciation and amortization 672,050 631,002 Amortization of bond discount 75,600 75,600 Gain on debt restructuring 0 (352,227) Provision for losses on rents and other receivables 31,525 (5,230) Changes in assets and liabilities: Rents and other receivables (47,367) 1,256 Prepaid expenses (17,547) (2,726) Commercial commissions, deposits and other 21,713 18,185 Accounts payable and accrued expenses 113,829 125,227 Accrued interest 92,022 (3,213) Unearned revenue (29,298) 3,583 Tenant security deposits (2,606) 4,833 NET CASH PROVIDED BY OPERATING ACTIVITIES 480,930 586,849 INVESTING ACTIVITIES Purchases of and improvements to investment properties (46,333) (215,620) Purchase of restricted bond cash reserves (34,216) (29,500) NET CASH USED IN INVESTING ACTIVITIES (80,549) (245,120) SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D. Six Months Ended June 30, 1997 1996 FINANCING ACTIVITIES Principal payments on long-term debt $ (90,532) $ (100,167) Debt Issuance Costs (16,500) (352,348) Due (to) from related parties 0 (5,000) NET CASH USED IN FINANCING ACTIVITIES (107,032) (457,515) INCREASE IN CASH AND CASH EQUIVALENTS 293,349 (115,786) CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 561,667 522,835 CASH AND CASH EQUIVALENTS END OF PERIOD $ 855,016 $ 407,049 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited) June 30, 1997 NOTE A--BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1996. NOTE B--MORTGAGE DEBT Mortgage debt consists of the following: June 30, December 31, 1997 1996 Collateralized by Investment Property First Mortgages: Oak Terrace Active Retirement Center and Healthcare Center $ 12,800,000 $ 12,800,000 less bond discount (2,126,242) (2,201,842) Sunwood Village Apartments 8,040,290 8,070,786 Thomasbrook Apartments 4,984,179 4,984,179 Forest Park Shopping Ctr. 1,157,877 1,201,571 Bayberry Crossing Shopping Ctr. 2,602,520 2,618,862 $ 27,458,624 $ 27,473,556 Interest expense totaled $1,221,854 and $1,200,718 during the first half of 1997 and 1996, respectively. On May 17, 1996 the Partnership refinanced the matured first mortgage on Sunwood Village Apartments. The terms of the new mortgage are $8,100,000 at 8.625% interest with monthly principal and interest payments in the amount of $63,000 through the loan maturity date of June 1, 2001 (5 years). SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D. NOTE B--MORTGAGE DEBT--CONT'D. The Partnership recognized a gain of $352,227 upon payment of the refinanced note due the forgiveness of all the deferred interest relating to the original note. The Partnership has the option to currently pay or defer payment of interest due on the hedged portion ($8,400,000) of the Oak Terrace Active Retirement Center financing. As of June 30, 1997 and December 31, 1996, $737,370 of deferred interest has been accrued and is reflected in long-term accrued interest. NOTE C--RELATED PARTY TRANSACTIONS SPECS, Inc., a Kansas Corporation in which the individual General Partner has a minority interest, receives property management fees for providing property management services. SPECS, Inc. also performs various professional services for the Partnership, primarily tax accounting, audit preparation, SEC 10Q and 10K preparation, and investor services. Property management fees paid by the Partnership to SPECS, Inc. are as follows: Six Months Ended June 30, 1997 1996 Property Management Fees $ 130,088 $ 141,900 Amounts due from related parties consist of the following: June 30, December 31, 1997 1996 Secured Investment Resources II, Inc. $ 174,423 $ 174,423 Secured Investment Resources Fund, L.P. 5,000 5,000 $ 179,423 $ 179,423 The amount due from SIR II, Inc. represents excess syndication costs. NOTE D--CASH DISTRIBUTIONS No cash distributions have been made since April 1990. Future distributions will only be made from excess cash flow not needed for working capital reserves. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Revenues for the first six months of 1997 decreased by $57,600 (1.9%) compared to the same period of last year. The commercial property at Forest Park Center in St Louis remained strong, the rental income at Bayberry Center decreased due to vacancy and bad debt. The Partnership has increased the rental rates at Oak Terrace, resulting in increased revenue of $59,300. The Partnership feels that the strong market at Oak Terrace will continue through 1997. The weaker apartment market has caused a decrease in rental income of $26,800 when comparing the first six months of 1997 to the same period of 1996. Operating and Administrative expenses increased $44,300 (3.3%) when comparing the first six months of 1997 with the same period of 1996. Higher property operating expenses are primarily due to higher resident turnover. Interest expense for the first six months increased $21,100 (1.8%) over the 1996 first six months expense. The Partnership anticipates that operating results for the first six months will be representative of the results for the remainder of the year. Liquidity and Capital Reserves During the first six months $480,900 of cash was provided by operating activities, $80,500 was used for investing activities and $107,000 was used to reduce long term debt. Although the cash position has improved, the Partnership is past due on the Thomasbrook Apartment first mortgage. The General Partner believes that working capital will be available during the remainder of the year to reduce this past due balance and fund known, on-going operating and capital requirements. The General Partner also anticipates that 1997 cash flow from operations will improve because of stronger occupancy and rental rate increases. It is the General Partner's intent to evaluate the Partnership's portfolio to determine if it is prudent to offer one or more properties for sale or possible restructure of the related financing packages. Any unleveraged portion of the net sale proceeds or favorable refinancing terms could generate additional working capital. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None. Item 2. CHANGES IN SECURITIES Inapplicable. Item 3. DEFAULTS UPON SENIOR SECURITIES None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Inapplicable. Item 5. OTHER INFORMATION Inapplicable. Item 6. EXHIBIT AND REPORTS ON FORM 8-K (a) Exhibits None. (b) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended June 30, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SECURED INVESTMENT RESOURCES FUND, L.P. II A Delaware Limited Partnership (Registrant) By: James R. Hoyt as Individual General Partner Date: August 15, 1997 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: August 15, 1997 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SECURED INVESTMENT RESOURCES FUND, L.P. II A Delaware Limited Partnership (Registrant) By: /s/ James R. Hoyt James R. Hoyt as Individual General Partner Date: August 15, 1997 By: Secured Investment Resources II, Inc. as Corporate General Partner By: /s/ James R. Hoyt James R. Hoyt, President Date: August 15, 1997 EX-27 2
5 Unaudited. 1 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 855,016 2,028,091 116,397 (86,125) 0 1,580,157 38,384,764 12,560,770 29,432,242 2,251,787 27,458,624 0 0 0 0 29,432,242 0 3,018,065 0 1,553,152 672,050 0 1,221,854 0 0 0 0 0 0 (428,991) (7.91) 0
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